JUSTIFICATION Many airport sponsors under the Federal airport program operate upon very limited budgets and become financially embarrassed if required to make large expenditures of municipal funds during a period when there is no corresponding inflow of municipal receipts. Construction contractors customarily stipulate that municipal as well as other employers must pay for construction work in installments as the work progresses. Consequently there is strong pressure on CAA to make not only progress payments but grant payments in advance of the actual performance of those items of work which, when completed, will correspond to such installment of grant. This is not legally possible under existing law. It would necessarily involve the danger that occasionally a project might not be completed and that the Government would have advanced funds by way of advance grant for which the Government would receive no corresponding benefit. Such benefit is normally the accomplishment of a completed and functioning project airport. POSITION OF THE COMPTROLLER GENERAL All interested parties appear to agree on the desirability of this legislation as a practical matter. The Comptroller General expressly disapproved it by letter dated March 30, 1948, to the chairman of the Senate committee, on the legal ground that advances of public moneys are prohibited by 31 U. S. C. 529, and that S. 1285, by permitting partial grant payments to sponsors in advance of the actual performance of the corresponding work, would constitute an advance of public moneys. By subsequent letter, dated April 20, 1949, to the chairman of the Senate committee, the Comptroller General recognized that authorization of advance grant payments would probably decrease the cost of the Federal airport program to the Government by eliminating or materially decreasing allowances for interest on borrowed money, now necessarily included by construction contractors in their bid prices on airport construction work. He is concerned, however, about the advance of Federal funds to sponsors as constituting an objectionable loan rather than reimbursement for expenditures actually made, particularly as contractors to whom such advance payments might be made are frequently financially irresponsible, and such advances consequently could not be recovered. In other words, he is willing to trust a municipality but not a municipality's contractors and material men. The Comptroller General accordingly recommended including in S. 1285 the following proviso: * Provided, That the sponsor certify to the Administrator that the aggregate of expenditures to be made from such advance payments will not at any time exceed the cost of the airport development work which has been performed up to that time. * * * An amendment was likewise recommended by the Department of Commerce for the declared purpose of avoiding the statement of administrative detail in the bill. The principal substantive change recommended by Commerce is the authorization of the Administrator to proceed by informal consultation with airport sponsors rather than in accordance with formal regulations, as provided by S. 1285 in its original form. Both amendments are desirable and were incorporated into S. 1285 before it passed the Senate. ABSENCE OF OPPOSITION The bill is noncontroversial in character. Aside from the original objection of the Comptroller General, which has been withdrawn in view of the incorporation into S. 1285 of his suggested amendment, there has been no opposition from any source. CHANGES IN EXISTING LAW In compliance with paragraph 2a of rule XIII of the Rules of the House of Representatives, changes in existing law made by the bill, as introduced, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics. existing law in which no change is proposed is shown in roman): FEDERAL AIRPORT ACT PAYMENTS SEC. 14. The Administrator, after consultation with the sponsor or sponsors with which a grant agreement has been entered into, shall determine at what times, and in what amounts, payments shall be made under this Act. [The aggregate of such payments at any time with respect to a particular project shall not exceed a percentage of the project costs of the airport development which has been performed up to that time (and which the sponsor or sponsors to which the payments are to be made certify to have been performed in accordance with the approved plans and specifications for such project), equal to the percentage of the allowable project costs of the project determined to be the United States share of such costs; and if the Administrator shall determine at any time that the aggregate of such payments exceeds the United States share of the allowable project costs of such project the United States shall be entitled to recover such excess, Such payments shall be made to such official or officials or depository, authorized by law to receive public funds, as may be designated by the sponsor or sponsors entitled to such payments.] Payments under a grant agreement, in an aggregate amount of not to exceed 90 per centum of the United States' share of the total estimated allowable project costs of the project, may be made from time to time in advance of accomplishment of the airport development to which such payments relate, provided, that the sponsor certify to the Administrator that the aggregate of expenditures to be made from such advance payments will not at any time exceed the cost of the airport development work which has been performed up to that time. If the Administrator determines at any time that the aggregate amount of payments made under a grant agreement exceeds the United States' share of the total allowable project costs of the project, the United States shall be entitled to recover such excess. If the Administrator finds that the airport development to which the advance payments relate has not been accomplished within a reasonable time or such development is not completed, the United States shall be entitled to recover such part of such advance payment for which the United States received no benefit. Payments under a grant agreement shall be made to such official or officials or depository, authorized by law to receive public funds, as may be designated by the sponsor or sponsors entitled to such payments. AMENDING SECTION 6 OF THE FEDERAL AIRPORT ACT JULY 21, 1949.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed Mr. BECKWORTH, from the Committee on Interstate and Foreign Commerce, submitted the following REPORT (To accompany H. R. 4239] The Committee on Interstate and Foreign Commerce, to whom was referred the bill (H. R. 4239), to amend section 6 of the Federal Airport Act, having considered the same, report favorably thereon with an amendment and recommend that the bill as amended do pass. The amendment is as follows: Page 1, after line 5, insert the following section: SEC. 2. Section 6 (b) of the Federal Airport Act, as amended, is hereby amended by substituting a comma for the period at the end of paragraph (2) thereof and adding the following: "except that a priority shall be granted to projects in a State when the total allocation from the discretionary funds for projects in such State have not amounted to as much as one-fourth of the total amount of the apportionment for such State under subsection (a) of this section." The bill has the approval of the Department of Commerce, as will appear from letter attached dated June 10, 1949. This bill will amend section 6 (a) of the Federal Airport Act by altering the percentage of all appropriated funds which are apportioned among the States on the basis of a population and area formula, from 75 percent to 60 percent, and by altering the percentage of appropriated funds which constitute a discretionary fund for use wherever the Administrator considers such use necessary to carry out the Federal-aid airport program, from 25 percent to 40 percent. The committee amendment amends section 6 (b) of the act by adding a provision requiring that the Administrator, in determining the projects for which moneys in the discretionary fund are to be used, give priority to projects in a given State when the total allocations from the discretionary fund for other projects in that State have not amounted to as much as one-fourth of the total amount of the apportionment for such State made under section 6 (a). The effect of this latter amendment is to assure to the several States at least the amount of appro H. Repts., 81-1, vol. 5-49 JUSTIFICATION Many airport sponsors under the Federal airport program operate upon very limited budgets and become financially embarrassed if required to make large expenditures of municipal funds during a period when there is no corresponding inflow of municipal receipts. Construction contractors customarily stipulate that municipal as well as other employers must pay for construction work in installments as the work progresses. Consequently there is strong pressure on CAA to make not only progress payments but grant payments in advance of the actual performance of those items of work which, when completed, will correspond to such installment of grant. This is not legally possible under existing law. It would necessarily involve the danger that occasionally a project might not be completed and that the Government would have advanced funds by way of advance grant for which the Government would receive no corresponding benefit. Such benefit is normally the accomplishment of a completed and functioning project airport. POSITION OF THE COMPTROLLER GENERAL All interested parties appear to agree on the desirability of this legislation as a practical matter. The Comptroller General expressly disapproved it by letter dated March 30, 1948, to the chairman of the Senate committee, on the legal ground that advances of public moneys are prohibited by 31 U. S. C. 529, and that S. 1285, by permitting partial grant payments to sponsors in advance of the actual performance of the corresponding work, would constitute an advance of public moneys. By subsequent letter, dated April 20, 1949, to the chairman of the Senate committee, the Comptroller General recognized that authorization of advance grant payments would probably decrease the cost of the Federal airport program to the Government by eliminating or materially decreasing allowances for interest on borrowed money, now necessarily included by construction contractors in their bid prices on airport construction work. He is concerned, however, about the advance of Federal funds to sponsors as constituting an objectionable loan rather than reimbursement for expenditures actually made, particularly as contractors to whom such advance payments might be made are frequently financially irresponsible, and such advances consequently could not be recovered. In other words, he is willing to trust a municipality but not a municipality's contractors and material men. The Comptroller General accordingly recommended including in S. 1285 the following proviso: * * Provided, That the sponsor certify to the Administrator that the aggregate of expenditures to be made from such advance payments will not at any time exceed the cost of the airport development work which has been performed up to that time. * * * An amendment was likewise recommended by the Department of Commerce for the declared purpose of avoiding the statement of administrative detail in the bill. The principal substantive change recommended by Commerce is the authorization of the Administrator to proceed by informal consultation with airport sponsors rather than in accordance with formal regulations, as provided by S. 1285 in its original form. Both amendments are desirable and were incorporated into S. 1285 before it passed the Senate. |